Nomura Securities on Large Cap Telecom: Margins Impacted by Wealth Transfer - Next Version Coming Up
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Price: $39.49 -0.53%
Rating Summary:
18 Buy, 30 Hold, 2 Sell
Rating Trend:
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Today's Overall Ratings:
Up: 2 | Down: 3 | New: 2
Rating Summary:
18 Buy, 30 Hold, 2 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 2 | Down: 3 | New: 2
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Nomura Securities on Large Cap Telecom: Margins Impacted by Wealth Transfer - Next Version Coming Up
Analyst, Mike McCormack, said, "On balance, both Verizon (NYSE: VZ) and AT&T (NYSE: T) results were slightly softer than expected, with the effects of the iPhone slightly more detrimental than previewed. Meanwhile, Sprint (NYSE: S) delivered results slightly ahead of braced expectations. With the quarter behind us, we feel the focus will transition to the achievability of estimates. In our view, we believe that the range of guidance provided by AT&T, and current consensus expectations, are the more achievable than expectations for Verizon. Despite having similar industry drivers, consensus appears to be discounting 13% EPS growth for Verizon, yet only 7% growth for AT&T. In 2011, both achieved similar growth levels, and historical precedent does not suggest a deviation. We anticipate another iteration of the iPhone (Nasdaq: AAPL) in 2H12, and believe that a refresh is explicitly contemplated in both Sprint and AT&T guidance, while optionality exists in Verizon’s 2012 outlook. We advise investors to reconcile expectations among all three carriers."
"We remain biased towards recommending investors look to AT&T for incremental investment in the space. We believe that consensus estimates are extrapolating a lower bar for AT&T, and that the valuation is more compelling. For Sprint, in our view, the magnitude and duration of adjustments needed to look past the incremental project spending add such a significant element of risk, that investment becomes unattractive, even as the share price hovers above $2."
Analyst, Mike McCormack, said, "On balance, both Verizon (NYSE: VZ) and AT&T (NYSE: T) results were slightly softer than expected, with the effects of the iPhone slightly more detrimental than previewed. Meanwhile, Sprint (NYSE: S) delivered results slightly ahead of braced expectations. With the quarter behind us, we feel the focus will transition to the achievability of estimates. In our view, we believe that the range of guidance provided by AT&T, and current consensus expectations, are the more achievable than expectations for Verizon. Despite having similar industry drivers, consensus appears to be discounting 13% EPS growth for Verizon, yet only 7% growth for AT&T. In 2011, both achieved similar growth levels, and historical precedent does not suggest a deviation. We anticipate another iteration of the iPhone (Nasdaq: AAPL) in 2H12, and believe that a refresh is explicitly contemplated in both Sprint and AT&T guidance, while optionality exists in Verizon’s 2012 outlook. We advise investors to reconcile expectations among all three carriers."
"We remain biased towards recommending investors look to AT&T for incremental investment in the space. We believe that consensus estimates are extrapolating a lower bar for AT&T, and that the valuation is more compelling. For Sprint, in our view, the magnitude and duration of adjustments needed to look past the incremental project spending add such a significant element of risk, that investment becomes unattractive, even as the share price hovers above $2."
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